This study evaluates potential transportation greenhouse gas (GHG) emission reduction strategies, as mandated by the Energy Independence and Security Act. The good news is that it attempts to account for indirect impacts that result from strategies that affect total vehicle travel. Many earlier emission reduction assessments overlooked these impacts, and so tended to favor policies that simply encourage the purchase of more efficient and alternative fuel vehicles, since those seem the easiest way to reduce emissions. However, at best those strategies help achieve two planning objectives: energy conservation and emission reductions. They do nothing to achieve other objectives such as congestion reductions, increased traffic safety, or to improve public fitness and health. In fact, because increased fuel efficiency reduces the per-mile cost of driving, these strategies tend to stimulate more total vehicle travel (called a rebound effect) which exacerbates other transportation problems.

On the other hand, mobility management (also called transportation demand management) strategies provide a much larger range of benefits because they improve transportation options (better walking, cycling, ridesharing and public transit) and give travelers incentives to use the most efficient option for each trip. As a result, they provide the following benefits:

Congestion reductions

Road and parking facility cost savings

Consumer savings and affordability

Accident reductions

Improved mobility for non-drivers

Energy conservation

Emission reductions

Reduced sprawl

Improved public fitness and health

Tables 3.3 to 3.6 of the report provide estimated cost per tonne of carbon dioxide emission equivalent (CO2e), taking into account some indirect impacts. The results indicate that fuel shifting strategies have uncertain net benefits; for example, electric-powered cars have estimated costs ranging from $343 cost to a $90 net savings per tonne of CO2e reduced. Similarly, traffic management (such as improved traffic signal synchronization, and freeway onramp controls) had costs ranging from more than $2,000 cost to $120 net savings per tonne of CO2e reduced.

The really big winners in terms of cost efficiency were (see table below):

These can be considered Win-Win Emission Reduction Strategies because they provide multiple benefits. They are "no regrets" strategies, because they are justifed for their economic benefits, regardless of the value placed on their emission reductions.

Climate change emission reduction benefits are typically valued at $50 per tonne. Other impacts are much larger in magnitude. This indicates the importance of considering indirect impacts: emission reduction strategies are worth far more if they also help achieve other planning objectives, but worth far less (they often have negative net value) if they stimulate more VMT and so exacerbate problems such as traffic congestion, accidents, road and parking facility costs, and sprawl.

The actual benefits of pricing strategies are probably much larger than the report estimated because their analysis used outdated assumptions. As discussed in the report's Appendix A: Methodological Issues, the analysis used elasticity values based on studies by Hughes, Knittel and Sperling and Small and Van Dender, which found that fuel price elasticities declined significantly between 1975 and 2006, down to -0.057 (a 10% increase in the price of driving reduces vehicle travel only 0.57%. However, those results reflect unique factors that stimulated vehicle travel demand during that time period, including declining real fuel prices, rising female employment, peak Baby Boom driving years, rising real incomes, and sprawl-encouraging highway building and development policies.

More recent studies indicate higher elasticities (a change in vehicle operating costs have a larger impact on vehicle travel), likely due to demographic and economic trends such as aging populations, stagnant real incomes, increased urbanization, improvements to alternative modes, and changing consumer preferences. Komanoff found that the short-run U.S. fuel price elasticity reached a low of -0.04 in 2004, but increased to -0.08 in 2005, -0.12 in 2006 and -0.16 in 2007, and long-run effects are typically about three times short-run, suggesting long-run effects as high as -0.48. Brand found that the 20% U.S. fuel price increase between 2007 and 2008 caused a 4.0% reduction in fuel consumption, indicating a short-run price elasticity of -0.13, and accounting for population and GDP growth, about -0.17. Long-run elasticities are typically two or three times higher, which is -0.3 to -0.5 (a 10% increase in vehicle operating costs reduces driving by 3-5%).

For more information on these factors see our report, Transportation Elasticities, in particular, the sections on "Vehicle Operating (Out-of-Pocket) Expenses" and "Vehicle Travel With Respect to Fuel Price". Most these studies show long-run elasticities of -0.2 to -0.5.

The USDOT study significantly underrates Pay-as-you-drive vehicle insurance (report pages 499-501). It assumes that, at most, 75% of insurance policies representing 43% of VMT would have PAYD pricing, although a total shift to PAYD is justified on traffic safety grounds (it could save about 5,000 lives annual in the U.S.) just as federal government policies have required states to implement seatbelt laws, DWI enforcement standards and motorcycle helmet laws, and it also helps achieve other insurance regulatory objectives. It assumes that PAYD would require a $131 billion cost for mechanical "hubodometers" to record vehicle mileage, but companies that currently offer PAYD insurance, such as Milemeter, simply use odometer readings, which minimizes costs. Modern odometers are extremely reliable - they must be because they are the basis of vehicle warrantee, lease and resale transactions, which often involve far larger financial burdens on vehicle manufacturers and dealers than a typical annual insurance transaction. The report also assumes that the average PAYD fee would be 4¢ to 6¢ cents per mile, although if fully implemented it would be 9¢ mile.

The USDOT study concludes that PAYD could reduce VMT and emissions by up to 3%, but other published studies (my own and those by Bordoff and Pascal, and Edlin) indicate greater travel impacts (typically 8-12% VMT reductions per affected vehicle if insurance is fully marginalized) and benefits. Of course, achieving these maximum benefits is not necessarily easy, but it is quite feasible and cost effective, so I think it is important that decision-makers understand this when evaluating options.

Comments

Comments

Mechanism needed to fulfil ideals

The writers of this report appear to have missed the point that there is a connection between urban limits, land supply, and land prices. There may well be net savings from the IDEALS posited by "Smart Growth", (and especially from the removal of anti-density regulations) but I want to see a convincing explanation of the market-beating mechanism by which urban sprawl is going to be contained, densities raised, and public transport rendered cost effective, WITHOUT increasing land prices and boosting mortgage costs. Because these cost increases far outweigh the benefits assumed in the above study.

This study does not discuss this in any way that shows that the authors have any idea about this problem. Not that they are alone in that.

Supply and demand mechanism.

Your conclusions don't follow from your premises. Esp when folks argue that increasing supply lowers costs and Glaeser just did so on Economix last week-ish. But perhaps you commented on that blog and refuted his argument and we didn't hear about it....

Best,

D

No problem with Glaeser

Wow, you are quite the Planetizen troll, aren't you? No trip-trapping over Dano's bridge goes unchallenged.

Increasing supply of LAND lowers the cost of land, restricting the supply of land RAISES the cost of land. Glaeser is quite clear about that. I am open minded about Glaeser's ideas on "increasing supply" in ways other than increasing land supply, but I don't see that he is saying that it will compensate for the price increases brought about by restricting land. He does not seem to have "harmonised" the 2 branches of his research yet. I stand by everything I have said about the effects of inflated land prices consequent on urban limits and a "cornered" supply of urban fringe land.

Glaeser's assertions

Grasping at straw aside, the literature disagrees with the implicit assertion, as the reasons for UGBs are determined locally and cannot be aggregated into one monolithic disparagement. And Glaeser is explicit in his disparagement about other means of restricting land as well, esp. zoning for large-lot SFD by electeds responding to homeowner's wishes.

Best,

D

Is Glaeser your friend or mine?

Fine, I agree with Glaeser on that point as well as the one he makes about urban limits driving land prices up, that you do not agree with. So that is me and Glaeser 100% in agreement and you and him only 50% in agreement.